US retail giant Walmart Inc did not have a merry Christmas as disappointing toy and clothing sales hit the chain’s bottom line, the company said on Tuesday.
The global chain said it has not yet been able to estimate the financial impact of the COVID-19 outbreak in China, where it has a large supply chain.
Walmart said that it is watching the outbreak, but “has not included any potential financial effects in its assumptions.”
Walmart CEO Doug McMillon said it is “too difficult to tell at this early stage exactly how to forecast” the financial impact of the outbreak, but he acknowledged that getting goods out of China “is an issue.”
The company, which has 11,500 stores located in 27 countries, including more than 430 in China, had responded to a US-China trade dispute by reorganizing its supply chain so as not to depend too much on a single country or geographic area.
However, the retailer, which is a staple for low-income households, saw sales slow in the fourth quarter ended Jan. 31.
Global revenue increased 2.1 percent to US$141.7 billion in the quarter, falling below expectations of US$142.5 billion. Comparable store sales in the US market, a key indicator for retailers, rose 1.9 percent, well below the gain analysts had projected and far slower than the 3.2 jump in the prior three months.
“The fourth quarter was not our best,” McMillon told analysts on a conference call.
While the quarter started strong, “in the few weeks before Christmas, we experienced some softness in a few general merchandise categories in our US stores,” Walmart chief financial officer Brett Biggs said in a statement.
“We understand the factors that affected our results and are developing plans to address them,” he said.
Biggs told analysts that “February has started well.”
The company said there were softer apparel, toy and game sales, and that “a lack of newness in gaming” was a factor.
Some analysts already had warned that mild winter weather in the US could have negative consequences for retailers, as was the case for Target Corp, Walmart’s main rival.
Even with the disappointing results, Walmart posted a 12.3 percent gain in net income to US$4.1 billion in the quarter, with a 123 percent surge for the full year to just shy of US$15 billion.
Earnings per share of US$1.38 compared with the expected US$1.43. For the coming year, it expects to achieve US$5 to US$5.15 per share.
The company also boosted its dividend to investors by US$0.04 to US$2.16 a share.
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